With The WB and UPN shutting down next fall to form The CW, dozens of orphaned affiliates are scrambling to align with the new network or find a way to go it alone.
The shift could mean more local news and programming in some markets, but it also threatens to put some affiliates out of business. And now some station owners, who had no advance warning about the deal, are threatening legal action.
“These broadcasters woke up one day and found out that, come September, the affiliation agreements were null and void,” says an executive at a major station group who declined to be named for potential legal reasons. “Everyone is trying to figure out what they'll do.”
When Warner Bros. and CBS Corp. unveiled the new network Jan. 24, a large chunk of distribution was immediately resolved. Tribune Broadcasting, a 22% owner of The WB network, and UPN parent CBS Corp. carved up 20 of the top 25 markets. When the CW launches in September, 16 Tribune-owned WB stations and 12 CBS-owned UPN outlets will make the switch. Both companies have agreed to 10-year affiliation agreements.
The smallest TV markets may have also been divvied up. According to executives familiar with the deal, many of The WB 100+ stations, a collection of mostly cable-only affiliates in markets numbered 100 and higher, will likely become CW outlets next fall.
That leaves most of the midsize markets, such as Cleveland, Kansas City, Mo., and Jackson, Miss., still in play. In some, the UPN and WB stations are owned by big media companies and are part of duopolies sharing programming and news. In a handful of markets, one company operates both the WB and UPN affiliates. Many more are owned by small, family-run companies that operate a few stations.
The CW says it will reach 95% of the U.S. TV viewers at launch, but on what stations is still largely unknown. CBS Corp. CEO Leslie Moonves says the deals will be decided in the next few months. “In every market, we're going to look at what is the stronger station,” he said.
Since last week, anxious station owners say they have been calling their UPN and WB representatives but the calls have gone unanswered. Some groups with CBS affiliates hope those ties will help them get the CW affiliation. Others venture that buying Warner Bros. syndicated product might help curry favor. Most are braced for a possible bidding war for the CW affiliation. If they win, it could be more expensive to be a CW affiliate: Like The WB, the new network will take reverse-compensation payments from stations, something UPN outlets did not previously face.
But as they court the new CW, station managers are frantically outlining alternatives. Analysts at influential TV-station consulting firms like Crawford, Northcott & Johnson and Frank N. Magid Associates are fielding calls for nervous clients seeking advice on how to proceed. “This has put everyone in a mercenary mood,” says Crawford, Johnson & Northcott Managing Partner Bruce Northcott. “You have to take care of your own station.” His advice: Add as much local programming as possible.
The most likely scenario for many is to forge ahead as an independent. Tribune plans to convert three stations to independents. Meredith Broadcasting may do the same with KPDX, its UPN affiliate in Portland, Ore., where Tribune nabbed the CW affiliation. “We are not afraid of the prospect of being an independent,” says Meredith President Paul Karpowicz. “This could be an opportunity for more local programming and more news and sports.”
Those are not luxuries many small owners can afford. Their business is built around network affiliation and programming supplied by The WB and UPN. Losing that supply has some station owners considering legal action.
One such disgruntled operator is St. Louis-based Roberts Broadcasting. The company, run by brothers Michael and Steven Roberts, owns three UPN stations. In St. Louis, its largest market, Roberts already knows The CW will air on Tribune's WB outlet, but its Columbia, S.C., and Jackson, Miss., stations still have a shot. But Michael Roberts says the company has invested millions in branding the stations as UPNs and, even if he wins The CW, the outlets have lost value.
“We've been disadvantaged economically,” he says. “There is a degree of warning, preparation and consideration that should have been given to us.” He and other UPN owners are reviewing their affiliation agreements and evaluating their legal position.
Already, the merger is sending aftershocks across the station marketplace. Granite Broadcasting has deals to sell its WB stations in Detroit and San Francisco for a hefty $180 million, but that was before The CW aligned with CBS-owned UPNs in both markets. At the same time, Granite is in the process of buying the CBS affiliate in Binghamton, N.Y., in a deal that's conditioned on its two WB sales.
Emmis Communications has been trying for months to sell its Orlando, Fla., WB affiliate. In New Orleans, Belo still has not closed its purchase of UPN affiliate WUPN, and the CW affiliation has already been granted to Tribune's WNOL there.
For stranded stations, salvation may come from one of the most affected station owners: News Corp.'s Fox Television Stations unit. At last week's NATPE convention, TV executives were buzzing that Fox may create a second programming service to power its nine UPN outlets that lose their affiliation. Already Fox has begun to remove mention of UPN from the stations.
A “Fox II” service could be first-run shows, such as Twentieth's proposed English-language telenovelas, news from sister Fox News Channel or reruns of Fox shows. The prospect of such a network has other groups, including LIN Television, which owns several endangered UPN affiliates, slightly more upbeat.
“The difference here is that you're not in it alone. You've got Rupert with you,” says LIN Television CEO Gary Chapman, referring to News Corp. Chairman Rupert Murdoch.